Neco 2021 Commerce Question 26
Practice objective / multiple choice question 26 from the 2021 Neco Commerce examination.
A company sells a product with an annual demand of 12,000 units. The ordering cost is ₦500 per order and the unit cost is ₦200. Holding cost is 25\% of the unit cost per year. The warehouse can hold at most 800 units at any time, and a safety stock equal to two weeks of demand must be maintained. Lead time is three weeks. Determine the order quantity that minimises the total annual cost without exceeding the warehouse capacity (including safety stock) and compute the resulting total annual cost. Give your answer as the order quantity (units) and the total cost (₦) rounded to the nearest naira.
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About This Question
This is Neco 2021 Commerce Question 26. It is one of the objective questions from the 2021 Neco Commerce examination.
Difficulty level: Hard .
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